GST Accounting & Invoicing Guide for Small Businesses
Master the fundamentals of Indian Goods and Services Tax: invoice requirements, place of supply rules, claiming full ITC, and simplifying CA handoffs.
How does GST accounting work for small businesses in India?
GST accounting involves charging the correct tax rate (CGST+SGST for intra-state or IGST for inter-state) on sales, capturing GST paid on vendor purchases to claim Input Tax Credit (ITC), and reporting outward and inward supplies via GSTR-1 and GSTR-3B summaries.
1. Understanding Intrastate vs Interstate Tax Breakups
Under Indian GST law, when buyer and seller are registered in the same state, the transaction attracts Central GST (CGST) and State GST (SGST) in equal halves (e.g. 9% CGST + 9% SGST for an 18% item).
When goods or services move across state borders, Integrated GST (IGST) applies at the full rate (18%). Likhtam evaluates the place of supply automatically to apply the correct tax components.
2. Mandatory Details on a GST Tax Invoice
A legally compliant tax invoice must include: consecutive sequential invoice number, invoice date, seller name, address & GSTIN, buyer name, address & GSTIN (for B2B), place of supply, HSN/SAC code per item, taxable value, tax rate, and tax amount in figures and words.
3. Claiming 100% of Eligible Input Tax Credit (ITC)
Every rupee of GST paid on your business purchases (inventory, factory equipment, office rent, packing supplies) can offset the GST you collect from customers, provided you maintain accurate purchase bills with valid vendor GSTINs.
Common Questions
GST rules mandate HSN codes based on business turnover. Missing HSN codes can lead to penalties and can prevent your B2B customers from claiming their Input Tax Credit.
Likhtam compiles your monthly outward sales and inward purchase vouchers into CA-ready GSTR-1 and GSTR-3B summaries and HSN registers in Excel or PDF in one click.
Put these workflows into action with Likhtam.
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